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FSA must take an online lead

My decision last summer to leave secure, recession-proof employment for the turbulence of cyberspace was met with a hefty dose of cynicism from almost everyone around me.

The change was certainly drastic. Like a chick peering over the edge of the nest, I viewed the world outside the FSA as challenging and disconcerting. There was a long way to fall if I screwed up.

I now know that what I really feared was the unknown. This explains the reactions of my friends and colleagues. Surfing the net for CDs and holidays was one thing but relying on an internet company for your livelihood – are you mad?

Nobody actually came out and said: “I think you are making a mistake”. Comm ents ranged from the bravely reassuring “You will always be able to get another PR job if things go wrong” to the cryptic “So, remind me again why you are going there?” The one person who provided unequivocal support and encouragement was my big brother, Michael, who works in the City. His reaction was for a very simple reason – he knew what he was talking about. As a registered user of the site, he understood what Interactive Investor did, knew about its track record, healthy bank account and strong survival prospects.

The reason for sharing all this with you is to break apart the suspicions held by many intelligent people that the internet is over-hyped, half-baked and only for anoraks.

The net is here to stay and advisers ignore it at their peril. Nearly two-thirds of IFAs who took part in a survey by res earch agency Forrester agree bec ause they have their own websites. Most of these are designed to attract customers and provide generic information rather than to sell online.

There are now two million people buying financial products online and another four million adults have used the web for financial services information in the last year.

Research from Screentrade shows that simple short-term products with lower costs and risks, such as general insurance and credit cards, are curr
ent fav ourites with financial cyber-shoppers. Isas are gaining popularity although it will take more time for investors to feel confident about buying financial products which req uire bigger sums of money or more commitment.

But the image of your average surfer as a computer geek is a red herring. Nearly one million over-55s are using the internet to help them with their financial decisions.

These silver surfers are dream customers for many financial companies. Older people find the internet convenient and easy to use and a third of them have already bought something online, making them three times more likely to shop on the internet than users in the 15-54 age bracket.

Boom and bust in the dotcom industry and security are still major concerns for many would be cyber-shoppers. For businesses, there is the unease about financial services missing out on benefits unless regulation keeps pace with the online revolution.

Philip Gough, of Pricewater housecoopers, is the co-author of a report which looks at the regulation of financial ser vices in an online environment. He says: “Regulators and the industry need to move fast to identify possible regulatory mandates and models of the future to avert the risks that undermine consumer confidence in buying over the internet.”

A recent Pwc/CBI survey revealed that 89 per cent of respondents have factored e-commerce into their business strategy but saw financial services regulation as a significant barrier to e-business development. This is currently a no-blame issue. The nature and impact of the internet, its glo bal dimension and the speed of its development could not have been predicted by those drafting the Financial Services Act in the early 1980s.

The challenge facing the FSA now is to put some serious muscle into e-commerce issues so that it anticipates change and leads where dev elopment is needed.

This seems to fit pretty squarely with at least two of the FSA&#39s statu tory objectives. The alternative is playing catch-up – an unacceptable and universally unpopular approach which would keep businesses and consumers waiting and make regulation appear constantly out of date.

It can be no bad thing that the Prime Minister is passionate about e-commerce and wants to make sure Britain leads the field. He gets mon thly reports from Patricia Hewitt, the former Treasury minister he appointed as e-minister, a role which gives her overall responsibility for the Government&#39s Information Age agenda.

For the financial services industry, the time for getting acquainted with the web is now. Your existing and potential customers relish the ease, convenience and accessibility of the internet plus the fact that there is no pressure to buy. Think of the savings you could make with facilities such as online fact-finds.

My message is to log on, if only so you can have an infor med opinion. Better still, buy something, anything, online. I started by sending someone a bottle of Champagne. It was painless. Clicking your financial details into a place you can trust that first time is a liberating experience. It has given me the confidence to shop on the web for something more even more exciting -a sparkling new Isa.

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19th November 20182:58 pm

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